Mississauga, Ontario-based Wajax Corp. reported its 2020 first quarter financial results on Monday, which showed a modest year-over-year sales decline in its industrial parts segment after a small gain in Q4 2019.
Wajax' industrial parts segment — No. 32 on Industrial Distribution's 2019 Big 50 List — had total Q1 sales of $91.7 million, down 1.8 percent year-over-year (YoY). Sequentially, sales improved from Q4's $88.5 million.
As a whole, Wajax had total Q1 sales of $344.1 million, down 8.1 percent YoY, as the company attributed the decline primarily to the March period as impacts from the COVID-19 pandemic accelerated. Wajax said revenue during January and February was in line with a year earlier.
The company's total Q1 profit of $4.1 million sunk 48.1 percent YoY.
Responding to COVID-19, the company said that about 40 percent of its employees are currently working from home and that volume-appropriate staffing levels have been maintained for field, branch and support operations.
Wajax has implemented the following cost reductions amid the pandemic:
- As of April 27, 541 employees have been placed on temporary layoff and a further 341 employees are on reduced work weeks or participating in workshare programs. In total, approximately 34 percent of employees have been impacted by layoffs (97 percent of which are temporary), reduced work weeks, work share programs and salary reductions. Wajax will continue to review workforce changes in relation to business volumes and customer requirements.
- Temporary salary reductions have been implemented, including reductions of 20 percent for the CEO, 10 percent for senior executives and between 5-10 percent for managers. Board member retainers have been temporarily reduced by 20 percent.
- Discretionary expenses have been significantly reduced and cost concessions have been sought from business partners where appropriate.
Wajax added that the planned Q2 implementation of its new ERP system has been temporarily deferred.
"We expect to partially offset volume declines with cost reductions while managing customer service levels, working capital and capital spending accordingly," said Mark Foote, Wajax president and CEO. "Cost-management programs and current sources of liquidity are expected to allow the corporation to weather this difficult period while preparing to return to growing its business and supporting its customers as conditions improve.”
Wajax had total 2019 sales of $1.55 billion.